Monday, May 29, 2017

The National Payments Corporation of India (NPCI) has enabled acceptance of JCB debit and credit cards at ATMs and POS terminals in India, through the National Financial Switch and the Rupay Network. JCB is a credit card issuer and acquirer in Japan, with a card acceptance network across 190 countries and territories, and this launch targets tourists and business travellers from Asia, where JCB This will allow a global card base of 101 million JCB card members (across 23 countries and territories) to pay and withdraw money in India, across 225,000 ATMs and over 2 million Point-of-sales terminals, according to a note from the NPCI. Following this partnership, 32 banks will accept JCB cards on ATMs, and two banks on POS. The formal announcement of this launch follows a pilot project in February with ICICI Bank, Union Bank of India and Indian Bank for JCB credit and debit cards acceptance, and with Axis Bank and ICICI Bank for POS acceptance. No target date for enabling 100% reach for ATMs and POS terminals has been specified by the NPCI.

This is particularly interesting, because it is the connection of two country specific networks independent of Visa, MasterCard and American Express; Rupay was built as a network independent of the two global networks, essentially to lower the cost of transaction, and as if in opposition to them, similar to what China did with UnionPay. On its website, NPCI reasons that since the transaction processing will happen domestically, it would lead to lower cost of clearing and settlement for each transaction.

The link between the two payment networks will also allow NPCI member banks (which is pretty much every major bank), to issue co-badged RuPay-JCB International cards, which will work as RuPay cards in India and JCB cards outside the country. According to the NPCI website, the Rupay Global Card currently works with Discover, Diners and Pulse networks in the Asia Pacific region, Europe, Middle East and Africa, North America and Latin America. In the UK, it works with DC Payments, Moneycorp, Travelex, Youtcash and Cardtronics ATMs.

National Payments Corporation of India (NPCI), the nodal agency for digital payment systems in the country, will soon launch its RuPay credit cards for which it has roped in a few banks, a top official said. “Our credit cards will be launched soon. These would be RuPay credit cards. A pilot is going on with five banks. In the pilot, about 7,200 transactions have taken place,” NPCI MD & CEO A P Hota said. Punjab National Bank, Central Bank of India, IDBI Bank, Andhra Bank and Union Bank are working under the pilot project.

“Three more banks will come under credit card product. We will launch the RuPay credit cards soon,” Hota said in an interview to PTI. Besides, the agency will also roll-out an inter-operable tap-and-go card for transit fare payments in buses and metro trains.

“We will start these inter-operable tap-and-go cards for transit payment for metro and bus ride. We are starting this tap-and-go card with Bangalore first. From June, the service will be expanded to Kochi and Ahmadabad,” Hota said.Speaking about digital payment expansion in the country, he said NPCI has now about 2.30 lakh bank ATMs and 3 crore point of sales (POS) terminals under its fold that will help it reach to a maximum people through non-cash mode.

He said installation of micro ATMs by banks through their business correspondents and Aadhaar pay platform will help acceptance of digital payments in rural areas.

“Last year, for all the banks together on the NPCI platform, 9 billion transactions had happened. As per our rough estimate, it was close to one billion till April this year…I believe by 2017-18, it would not be a challenge to meet the 25 billion target as was set in budget,” he added. Hota also said that about 10-12 more banks will join the NPCI infrastructure soon. Currently, there are 44 banks who are already under it.

Monday, July 11, 2016

RuPay, the domestic card payment service provider which was set to launch its credit card in June this year, has delayed the launch of its product. The earlier timeline for the launch was January, which was later pushed to June. However, now the National Payments Corporation of India (NPCI) has decided to shift the launch date even further.

“RuPay credit card was going to be launched in June 2016 but the launch has been further put off. The board approved date for the launch on August 28 but I think that will be a challenge. But, we will definitely launch the credit card in 2016,” said A P Hota, managing director and chief executive officer, NPCI.

Hota explained that the delay in launch is because NPCI is now working on a higher capacity financial technology infrastructure, which is taking time. “Currently, we have a switching system from Euronet. This has a capacity of 40 million transactions a day. However, the peak volume that we have processed is 14 million. But to be on a safe side, we have started work on a 100-million transaction capacity owned by FIS,” added Hota. The management believes it might take two-three years to reach the 100-million volume capacity mark.

Going ahead, within the credit card segment, NPCI will mainly be focusing on the top end segment, which is the gold or the platinum cards as they believe growth is likely to come from the higher-end variants.

RuPay is a domestic brand in the card space and is owned and developed by NPCI, and aims to compete with Visa and MasterCard that have a strong foothold in the segment. In the past year, RuPay has gained prominence as all the accounts started under the Pradhan Mantri Jan Dhan Yojana scheme have been given a RuPay card. According to the latest data, 219.3 million accounts have so far been opened and 180.1 million cards have been issued under this scheme.

Sunday, March 13, 2016

The National Payments Corporation of India (NPCI) has said it will launch a RuPay credit card by June or July this year. "By June or July we will rollout RuPay version of credit cards," said NPCI chairman M. Balachandran on the margins of a Unified Payment Interface (UPI) hackathon the umbrella organisation for retail payments in the country organised.

He later said the NPCI has escalated its paid-up capital to Rs.137 crore from Rs. 100 crore by broad-basing its stakeholders from public and private sector banks as well.

As many as 56 different banks have shareholding in NPCI despite it being a non-listed entity with no dividend declarations.

"Ours is a non-profit company, and in spite of not being a listed entity and we don't declare dividends, the enthusiasm shown by people to become shareholders in NPCI has been tremendous," said Balachandran.

According to him, there are 241 million RuPay cards in circulation comprising 35 per cent of the total card base in India and accounting to 20 percent of all card-based transactions.

Tuesday, February 9, 2016

Aiming at financial inclusion for all with India's domestic card service RuPay, the National Payments Corporation of India (NPCI) said that as many as 170 million of its 230 million customer base were first-time card users.

"We already have as many as 596 members who are in the RuPay network, including national, international and state cooperative banks. We are now trying to get the district central cooperative banks (DCCB) also in the fold," says A P Hota, managing director and CEO of NPCI.

RuPay also helps curb forex loss. For every transaction involving foreign card providers like Visa, MasterCard, American Express, there is the transaction fee on it going out of the country - an estimated 400 crore annually. "With a domestic card service system, there is a tremendous amount of money that India can retain," says M Balachandran, chairman, NPCI.

Another advantage with using RuPay over international card providers for a consumer is when it comes to the merchant discount rate (MDR) - the rate charged by banks providing debit and credit card services to merchants. So normally a food bill of Rs 2,000 or a saree purchase of Rs 4,000 will result in a Rs 20-Rs 40 deducted as MDR.

"With RuPay, the advantage is that we charge a fixed rate. We charge 60 paise on the acquirer bank and 30 paise on the issuer bank - amounting to 90 paise per transaction. Normally debit card interchange is anywhere between 0.65 to 1%. Credit card interchanges could be 1%-2%. So with RuPay, there is lower costs to merchants, which is passed onto the card holder," says NPCI's Hota.

RuPay also has RuPay Platinum and RuPay international, in partnership with Diners' Club and Discover Financial Services, that aims at catering to a wider audience. NPCI plans to launch RuPay credit cards by June.

Monday, September 14, 2015

In a bid to promote the use of RuPay, the Indian version of
payment settlement card, the National Payments Corporation of India
(NPCI) is planning to roll out three new versions of the card within the
next one year.

Currently, RuPay card is being issued as debit and Kisan cards, along with the opening of the saving bank accounts.

The company will launch a Mudra card, a credit card and an
international card. NPCI, which had launched the RuPay payment scheme,
is in talks with the US, Japanese and Chinese bank card associations to
enable Indians avail of international services wherever these firms are
operating.RuPay is a card payment settlement system that competes with Visa and
MasterCard. Since its launch in March, 2012 until August 2014, 35
million such cards had been issued.

Mudra Bank
co-branded card will be a new card which will be introduced in
association with Mudra Bank, to cater to entrepreneurs while the new
credit card will pave way for the further acceptance of the RuPay brand
among the customers.

Speaking to reporters here on Monday, M Balachandran, chairman, NPCI
said for the international card, the corporation has tied-up with
Discover Network Merchants, which is the third largest in the US and
Europe and the issuer of Diners card and is in the final stages of talks
with JCB (Japan Credit Bureau) and China UnionPay.

As per the terms with the credit bureaus, while their cards will be
allowed to used in India, through NPCI network, and similarly through
their network RuPay cards will be allowed to access in any part of the
world. “With these tie-ups we will be able to cover almost major parts
of the world,” said Balachandran.

He was in Chennai to kickstart a nation- wide e-Payment literacy workshop on the eve of World Financial Literacy Day.

To increase the user base, the government has asked all the public
sector banks to issue their customers the RuPay cards. Balachandran said
that currently NPCI has a capacity to handle 20 million transactions
per day, and it will be expanded to 40 million in the next two months
and further to 100 million in one year’s time in order to facilitate all
the government subsidy transactions. DBT transactions alone estimated
to be around R1,159 crore through 44 schemes in 94 districts across the
country.

“Once the state governments also start using our system, we need to
have more capacity for which we are getting ready,” said Balachandran.

NPCI would invest around R100-150 crore every year as capital
expenditure to enhance capacities. Transactions under NPCI include
withdrawals from ATMs, point of sale operations and quench clearing.

Paramjit Kaur, a resident of Salempur village in
Punjab's Ludhiana district, can barely hide her excitement when asked
about the Jan Dhan scheme launched
last year. She was one of the first women from her village to open what
she calls the "zero balance" account. And she is one of the lucky few
to have a passbook.

The entries, all in English, show her as a student (she is actually a
home maker) and that she has not made a single transaction since the
account was opened on August 28, 2014. Her father's name is given in the
column for wife and the nomination column says "not registered".

All the people this reporter spoke to in the village had opened "zero
balance" accounts. Few of them received passbooks. None has received a RuPay card yet. They were not aware of the benefits of the scheme and did not know about the conditions to claim them.The situation was no different in the neighbouring Humbran village where 55-year-old Jaswinder Singh enrolled
himself for the scheme and has a passbook. But he, too, has not made a
single transaction and is yet to receive the RuPay card, making him and
others like him ineligible for the overdraft facility and accident and
life insurance benefits that come with these accounts.

According to the details of the scheme, an account holder becomes
eligible for an overdraft of up to Rs 5,000 only after satisfactory
operation of the account for six months and the RuPay card that comes
with the account has an inbuilt accident insurance cover of Rs 1 lakh.
According to government data, 179 million accounts were opened under the
scheme till August 26, 2015. However, only "10 lakh (one million)
accounts have been found eligible for overdraft. Out of these, the
overdraft facility has been availed by 164,962 account holders."

The sense one gets after talking to a number of bankers is the scheme,
though laudable in its objective, is suffering because of procedural
complexities. "Since most of these accounts were opened in a great hurry
and at organised camps, many entries need to be checked and rechecked.
The feedback I receive is that entries, at least in 60-70 per cent
cases, with regard to nomination just do not exist. In such a scenario,
how can insurance claims be settled?" asked a middle-level banker with a
leading public sector bank posted in Ludhiana.

Bankers say the reason so few account holders are eligible for overdraft
is many of them have not strictly followed the know-your-client (KYC)
norms. Non-existence of mandatory transactions within 45 days of the
opening of the account is another reason. "We sent RuPay cards to
addresses given by the customers. A majority of them came back to us as
those addresses just do not exist. It is a huge problem for us," a
Delhi-based banker with another government-owned bank told this
reporter.

Bankers also say that since other schemes like the Pradhan Mantri
Suraksha Bima Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana and Atal Pension Yojana are
linked with Jan Dhan accounts, their success will depend on how the
loopholes in the Jan Dhan accounts are plugged. "Suppose the premium for
any of these schemes is to be deducted from the Jan Dhan account. If
there is no transaction and hence no balance, how will the premium be
deducted?" observed another banker.

Lack of awareness about the scheme, especially in villages, has created a
situation where expectations are turning into disappointment. "All the
workers who work in my field had opened Jan Dhan accounts. Once in 15-20
days they go to bank branches to check whether they have received some
money. Once they get to know that no amount has been credited, they come
back thoroughly disappointed," Jagjit Singh, sarpanch of Chankoin Khurd
village in Ludhiana district, told this reporter.

(Our experience with how the Jan Dhan Yojana has unfolded in some
villages in Ludhiana district raises questions about the sustainability
and effectiveness of the financial inclusion scheme. We must, however,
make it clear that we have not conducted an all-India survey, but base
our observations on discussions with a few villagers in Ludhiana,
selected at random, and a few bankers. The picture may be different in
other parts of the country.)http://www.business-standard.com/article/economy-policy/one-year-of-jan-dhan-many-loose-ends-yet-to-be-tied-115091200834_1.html

Sunday, April 5, 2015

The RuPay card, launched by the National Payments Corporation of India
(NPCI), is now offering 1 per cent cashback in a direct challenge to
international payment card companies like Visa and MasterCard. The
cashback facility is available across all RuPay debit cards, which can
be used at ATMs, point of sale terminals (PoS), and online transactions.

This implies whatever purchase one makes using the RuPay card, 1 per
cent of that purchase amount will be credited back to the account of the
cardholder.

Apart from public sector banks, RuPay cards are also issued by regional
rural banks, co-operative banks and some private sector banks.

Here are the other benefits of RuPay cards.

1) Lower Cost: Being of Indian origin, RuPay card is
cost effective for users as it charges lower processing fees for
domestic transactions compared to other cards. "Since the transaction
processing will happen domestically, it would lead to lower cost of
clearing and settlement for each transaction," NCPI says on its website.

2) Faster Processing: All RuPay card payments are processed within India. This makes RupPay card transactions faster than other international cards.

3) Security: RuPay being a domestically developed
card, all transaction and customer data related to this card transaction
reside in India. It has also launched an e-commerce solution called
PaySecure, which provides a secure platform for e-transactions. The
platform offers enhanced security measures in addition to the RBI
mandated 2-factor authentication requirement like registration, one-time
password (OTP), image-based authentication and anti-phising measures.

Like other international debit cards, RuPay cards also use EVM
(Europay, Master, and Visa) chip, a global standard for credit card and
debit card payments based on chip card technology. In an EVM card each
transaction at point of sales is authenticated through entry of a
personal identification number to verify the genuineness of cardholder.

EVM-based cards have more security features than magnetic-strip cards
where typically only the card's number and expiry date is processed. EVM
cards contain more information which needs to be verified at a
point-of-sales transaction, making transactions more secure.

Monday, February 2, 2015

The government, which is striving to take banking to every household
in the country and reduce the number of cash transactions, is
aggressively promoting the use of state-backed RuPay cards by offering 1% cashback, in a direct challenge to card companies such as Visa and MasterCard.

RuPay is an Indian domestic card scheme launched by the National
Payments Corporation of India that can be used at ATMs, PoS terminals
and e-commerce websites. Apart from all public sector banks, regional
rural banks and co-operative banks issue RuPay cards in an effort to
promote financial inclusion. Other countries have encouraged the use of
plastic money by incentivizing people through cash-back and lower tax.

"South Korea had offered similar encouragement and the result was
phenomenal," said AP Hota, managing director and CEO, National Payment
Corporation of India, adding, "There are places where if you pay by
card, tax on goods is lowered." Under the Pradhan Mantri Jan-Dhan
Yojana, the number of accounts opened was 11.5 crore as of January 17
after a survey of 21.02 crore households.

Of the total bank accounts opened, 3.23 crore have deposits worth Rs 9,188 crore, finance ministerArun Jaitley
had said on Tuesday. RuPay cards have been issued to more than 10 crore
beneficiaries so far under the scheme as the government tries to move
to a cashless society in the long-run. There is an overdraft facility
under the scheme.

All RuPay cardholders under the Jan-Dhan scheme are eligible for personal accident as well as life insurance cover, the charges of which are lower than other cards in the market. But despite the lower processing fee compared with MasterCard and Visa, the RuPay isn't widely used as yet.

National Bank for Agriculture and Rural Development (NABARD) has
sanctioned Rs 30 crore to these financial institutions for the purpose.

RuPay KCC is a smart card used by farmers at automated teller machines
(ATM) or point of sales (PoS) machines, where it could be swiped for
withdrawing cash or making payments. It does away with the necessity of
visiting Primary Agriculture Cooperative Societies (PACS) or bank to
operate the account.

Under the project, NABARD has
extended support of Rs 19 crore and Rs 11 crore respectively to all
seven RRBs and 15 cooperative banks operating in the state.

To ensure doorstep delivery of banking services to farmers, NABARD has
also supported these financial institutions to deploy over 11,000
micro-ATMs/PoS machines at all their branches.

Recently, NABARD UP region chief general manager K K Gupta had convened
a meeting to review progress made under the scheme. Advising banks to
improve implementation of the project, he said NABARD would provide
assistance of Rs 5 crore to cooperative banks in setting up over 100
ATMs in rural areas and utilising PACS as their Deposit Mobilising
Agents.

NABARD support for technology adoption in cooperative banks and RRBs
would benefit not only farmers, but also rural populace in general, who
have opened accounts under Pradhan Mantri Jan Dhan Yojana (PMJDY).

Besides, NABARD has supported cooperative banks and RRBs to set up 189
financial literacy centres in rural areas of UP with grant of over Rs 8
crore for disseminating information and creating awareness on various
financial products and services.

Sunday, January 11, 2015

Meets Representatives of Social Infrastructure, Human Capital and
Development Groups as Part of his Pre Budget Consultative Meeting

The Union Finance Minister Shri Arun Jaitley said that apart from
on-going schemes and programmes for the marginalized and vulnerable
section of the society, the Government has initiated various special
social sector programmes. He said that these programmes among others
include Swacch Bharat Mission (Gramin), which will set the base for
improving sanitation and health standards; Pradhan Mantri Jan Dhan
Yojana (PMJDY) and RuPay debit card which will extend financial
inclusion and give financial empowerment to the account holders at
large.

The Finance Minister, Shri Jaitley was making his Opening Remarks
during the Pre Budget Consultative Meeting with the representatives of
Social Infrastructure, Human Capital and Development Groups. He said
that more than 63% of the population is in the age group of 15-59 years,
broadly termed as India's demographic dividend. He said while this
young population provides India a great opportunity, but it also poses a
great challenge to the Government. He said that benefits will flow only
if our population is healthy, educated and properly skilled. In this
context, he said that investments, especially in social infrastructure
that build-up human capital are crucial. Shri Jaitley said that India
needs to take advantage of this demographic window in the next couple of
decades and garner its benefits.

Therefore, the Finance Minister said
that his Government has put thrust on skill development as well as on
'Make in India' as the Government's endeavour to improve employability
and create large employment avenues for the youth among others. He said
that skill development has been given focused attention for which a
dedicated Department of Skill Development and Entrepreneurship has been
created in the Central Government. He said that the challenge for the
country now is in planning and acting towards converting its potential
demographic force for enhancing opportunities of growth by dovetailing
the quality of manpower to the requirements of employers, both domestic
and international.

The Union Finance Minister Shri Arun Jaitley said that emerging trends
indicate the growth deceleration in India has bottomed-out. The Finance
Minister said that significant downward trend in inflation has also been
recorded in the second and third quarter of 2014-15. He said that
external environment has also largely turned in India's favour. In such a
back drop, the Finance Minister said that domestic policies to achieve
macro-economic balance and the on-going process of economic reforms
would lend further strength to the recovery of the economy.

Various suggestions were received from the representatives of the
different social sector groups during the meeting. Major recommendations
include that immediate steps be taken in the budget to prevent any
scope of diversion and misallocation of funds meant for the benefit of
dalits and adivasis. This will result in about Rs. 30,000 crore to be
available for the development of Scheduled Caste and Scheduled Tribes.
Other suggestions include to set apart in the coming budget the entire
16.2% for Scheduled Castes and 8.2% for Scheduled Tribes, establishment
of well designed and dedicated institutional mechanism for Schedule
Caste Sub Plans (SCSPs) Tribal Sub Plans (TSPs) separately at the Centre
and State levels, creation of a separate unit within Niti Ayog with
power to review, monitor and direct to ensure effective implementation
of the SCSP and TSP as well as setting-up of a nodal unit headed by a
Joint Secretary with the responsibility of preparation of Annual SCSP
Plans and their subsequent implementation.

Other suggestions include adequate allocation for ICDS budget, Mid Day
Meal Scheme and for the programmes for the nutrition of mother and child
under Food Security Act as well as clear demarcation of funds to remove
malnutrition among children of dalits and adivasis etc. Besides this,
there was suggestion for budget transparency at local level in order to
have better utilization of funds and results of various social welfare
schemes at the grass root level etc.

Other suggestions made during the aforesaid meeting include that a
mechanism needs to be built to develop entrepreneurship among dalits,
schemes to be brought out for developing art and culture of dalit and
adivasi communities. Suggestions were also made about proper
implementation of Prevention of Domestic Violence against Women Act,
appointment of women protection officers, increasing the scope of
Nirbhaya Fund to cover the domestic violence against women etc. A
suggestion was made that Finance Minister may include a statement in his
Budget Speech condemning violence against women showing unequivocal
commitment of the Government in this regard.

Some suggestions were also made on investment on youth, especially from
those of socially excluded communities, investment in skill and
entrepreneurship building, more spending on education and social
enterprises, inclusion of youth leadership in CSR activities, higher
spending to change the social mindset of people against the use of
toilets etc.

Other suggestions include adoption and implementation of the National
Competition Policy to push the growth on higher trajectory, adoption and
implementation of Public Procurement Act. As public procurement
accounts for almost 30% of the total GDP worth US $136 billion annually,
therefore, Public Procurement Act would help in promoting the good
governance by curbing corruption in public procurement; and adoption of a
National Public Procurement Policy; adoption and implementation of
Financial Consumer Protection Act, fixing of fiscal management practices
by establishment of Parliamentary Budget Office, adoption of
international best practices in budgetary planning and reduction of
non-merit subsidies among others.

In end, suggestions were also made for enhancement of allocation to
education with an emphasis on making functional investment in early
childhood and elementary education, enhanced allocation to education to
6% of GDP in line with Kothari Commission and National Education Policy
recommendations and enhance allocation to elementary education by 1% to
accommodate a cumulative gap in education, enhanced allocation to areas
with strongest implications on quality-availability of teaching learning
materials, improved libraries and strengthening of the capacity of the
resource unit at the cluster level, enhance allocation for research,
monitoring and evaluation, address gaps in financial and planning
process to ensure full expenditure of allocated funds in education
sector among others.

Sunday, January 4, 2015

PUNE: The government on Friday said that banks had gone past the target of opening 10 crore Jan Dhan accounts
and had managed to cover 98% of the households, prompting to now launch
a "challenge" to find out if any family remained without access to
basic banking facility.

In recent weeks, there has
also been a significant increase in the funds deposited in the Jan Dhan
accounts with the corpus in the 10.36 crore accounts going past Rs
8,000 crore, according to data available with the finance ministry. But
7.6 crore account holders, which is around 73% of all Jan Dhan accounts,
had zero balance on December 30.

"We had done surveys and
it shows that across several states we have achieved 100% household
coverage. There are some households that are not allowing us access so
we will launch a challenge to help find out if there are households that
still do not have coverage," financial services secretary Hasmukh Adhia
said on the sidelines of the Banker's Retreat here.

He clarified that of the
25 crore households in the census, around 22 crore households had
participated in the survey conducted by banks and the percentage of
households was based on these. He said that the three-odd crore
households lived in gated communities and affluent areas and didn't need
help in opening accounts.

In August, the
Narendra Modi government launched an ambitious plan to provide all
households with a bank account and had hoped to open 7.5 crore accounts
by January. But the target was achieved much earlier and the government
realized that all households were still not covered, prompting it to
scale the target, which has now been achieved.

The household coverage
report available with the government showed that there are few states
such as Manipur (78%), Nagaland (76%), Meghalaya (83%), Arunachal
Pradesh (84%), Odisha (86%), Sikkim (89%) and Jammu & Kashmir (89%)
which still have a large number of households without access to a bank
account. But several of the traditional laggards such as Bihar, West
Bengal and Uttar Pradesh have near universal coverage.

In some of the districts
such as Meghalaya's East Jaintia Hills and South West Khasi Hills, there
is zero coverage. Adhia told TOI that special attempts will be made to
reach to this population so that no one is left behind. In addition, he
said that banks are being asked to sensitize account holders about using
the RuPay debit card within the first 45 days so that they are entitled
to the insurance facility.

A RuPay card under the Jan Dhan scheme may not be enough
for nominees to get the death benefit of ₹30,000 when an account holder
passes away. Some nominees found this out recently, to their surprise.

Gowramma
(name changed), from Karnataka, passed away recently. State Bank of
Mysore, where she is a Jan Dhan account holder, rejected the nominee’s
claim for the death benefit of ₹30,000 as the deceased was above 60
years of age.

According to the Finance Ministry
approved norms for life cover under the Jan Dhan scheme, the eligibility
for risk cover ceases when a person turns 60.

These
guidelines were framed long after the launch of the scheme and many
elderly people had enrolled for the same when it was launched by Prime
Minister Narendra Modi in late August. Under the current norms, the
account holder will have to exit the life insurance scheme the day he or
she turns 60.

State Bank of Mysore has till date received four cases each claiming death benefit of ₹30,000 under the scheme.

Of them, two claims were rejected straightaway as the deceased were aged above 60, sources in the bank said.

The
claims for the other two cases are being processed though the bank is
not clear as to which LIC office the claim papers have to be sent for
final settlement.

Confusion over claims

Public
sector banks are in a state of confusion on the issue of handling
claims. Even accident insurance claims are reaching the doorsteps of
these banks.

Although the banks have till date
issued 8.4 crore RuPay cards for over 10 crore Jan Dhan accounts, they
do not want to foot the death benefit bill for the life cover. They are
only keen on having a foolproof mechanism to pass on the claims to Life
Insurance Corporation. Both LIC and the public sector banks are yet to
firm up a seamless mechanism for claims settlement under the life cover
promised under scheme.

Meeting held

On
Wednesday, representatives of the Finance Ministry, Indian Banks’
Association and public sector banks held a meeting to discuss the
nitty-gritty of claims settlement for the ₹30,000 death benefit promised
under the scheme.

There is a need to map LIC
branches with those of the banks so that claims could be processed
seamlessly, said the chief executive of a public sector bank.

Currently, banks are not fully aware about how to take the process forward in case nominees come up with claims.

Indications
are that the nominees will now be asked to furnish an affidavit
confirming that the deceased was the head of the family or that he/she
was an earning member of the family, and in the age group of 18-59.

Monday, December 22, 2014

RBI deputy governor SS Mundra defends the scheme as a great start and says the government's direct benefit transfers will see more accounts getting used.

Banks have surpassed the Jan Dhan target of 7.5 crore accounts amid current tally standing at 9 crore new accounts. However, frantic target chasing has meant probably 30 percent of accounts are for already banked customers. Effectively, only 40 percent are operational with some money in the account, making no sense giving mandatory RuPay cards.

RBI deputy governor SS Mundra defends the scheme as a great start and says the government's direct benefit transfers will see more accounts getting used. Mundra says, “There was an operational lag initially between opening accounts and issuing of RuPay cards, but that takes time. Of late, gap has narrowed but the necessary ingredient is balance in the accounts.”

In the race to reach their targets, banks have opened accounts for some who already have accounts. Sometimes customers have beguiled bankers hoping to claim the insurance benefits that come with the new account.

“Yes, there were cases where people believed only new account would give entitlement to benefits. I can't give exact no of duplicate accounts but some surveys done show 30 percent duplicity. Disregarding the same, residual figure is still near original target”, he adds.

While duplicate accounts are not illegal, the bigger problem is that new accounts make sense only if some money is saved or spent. Mundra, like many bankers maintains that any serious usage of the new accounts will only take effect when government’s transfer benefits like food and fertiliser subsidy pass through them.

Mundra took over as Deputy Governor of the Reserve Bank of India, in charge of banking supervision and financial inclusion at a time when the new government had just lifted financial inclusion to mission mode with its Jan Dhan Yojana.

Inclusion has always been the central bank’s stated goal and an area of expertise for Mundra. He was the chairman of the committee on financial inclusion set up by the Indian Banks Association as also of the Nachiket Mor Committee on Comprehensive Financial Services for Small business and low income households.

As former chairman of Bank of Baroda and a career banker for 37 years, Mundra is also best endowed for supervising banks as a regulator at a time when loan defaults are running high.

Below is verbatim transcript of the interview:

Q: Jan Dhan is now almost six months old. Are we getting very close to the targets?

A: If we are talking in terms of figures then targets are already behind. If you recollect when Jan Dhan had started it had aimed at opening 7.5 crore or 75 million accounts. The last tally is almost 9 crore, so 90 million accounts have already open. So in terms of number of accounts to be opened certainly that milestone has been reached.

Jan Dhan was not only about opening the account and that is where the Reserve bank had been expressing all those things that opening of account is just the first step. It is very crucial that the accounts are operational and they bring certain desirable outcomes and larger outcome would be to inculcate a saving and investment habit in the people who are coming to the formal banking sector for the first time. But there is no denying the fact that for doing all that you have to have an account and that has been done.

Now it is also crucial to do some more steps. So the linking of this account with Aadhaar, the DBT should start flowing, the people themselves would start saving, but I am happy to see, when I look at the latest figure and I understand that now these accounts, though more than 60 percent of them are still not operational, but the account that are operational have already accumulated a saving of around Rs 7,000 crore, as per the latest data available. So, that is heartening, but as I said a number of things are yet to be done.

Q: Are operational accounts using RuPay card, how many of them are operational?

A: No, again we are getting too impatient about it. Opening the account itself and that is going on in mission mode. Initially, for obvious reasons there was a substantial lag between the opening of account and issuance of RuPay card. Issuance of RuPay card involved some more logistics, which takes its own time.

Q: It gets posted.

A: Yes, But of late the gap has narrowed. So, now we say that accounts opened are around 9 crore, maybe the RuPay card has been issues in 6 crore plus account. Now everything is interlinked. You don’t use a RuPay card on zero balance account. So, the necessary ingredient is that there has to be a balance in the account and moreover the issuance of RuPay card is one thing, then educating the people to use those cards. Let us be mindful of the fact that a number of people who are coming in this maybe a first time user of banking services.

Tuesday, December 16, 2014

As more people are brought under the Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme, their ability to access cash through ATMs remains a conundrum as the deployment of these machines is failing to match the requirement.

Banks and ATM operators worry
that low intercharge fee and a cap on the number of free ATM
transactions are making the scheme unviable.

A warning was sounded by the CATMi (Confederation of ATM Industry), an association of companies who deploy ATMs for banks, about the risk of high dormancy among accounts opened under PMJDY if enough ATMs were not made available to service the new account holders.

RuPay is a domestic card scheme facilitating a multilateral system of payments in India, as per RBI's directive.

The newly issued card requires an ecosystem that supports it. New
machines see less than 100 transactions a day, against a minimum of 120
required for an ATM operator to break even.

ATM operators and banks point to operating costs involved in keeping a
machine running and say that existing interchange fee is not enough to
sustain the business model, affecting their ability to install more ATMs.
The April to June quarter for the year saw ATM deployment grow at a measly 1% to the corresponding quarter a year ago.
The total number of ATMs in India stand at 1,67,000 as of June 2014; Point of Sale (PoS) terminals account for 1.08 crore.

ATM unavailability limits Card adoption

Tata Communications Payment Solutions CEO Sanjeev Patel highlighted
the tremendous work done in bringing the rural populace under the
banking scheme, and added that "not much" had been done to make the card
adoption easier.

According to Patel even when card issuance has seen an upswing, the ecosystem necessary to support it is dwindling, with many players choosing to slow down deployment.

A report by Deloitte and CII makes a case for 20,000 new ATMs to be
available in the first phase of Narendra Modi government's financial
inclusion plan; expected to run from August 15, 2014 to August 14, 2015.

Organized Banking Route at risk

Many Indian banks, state-owned and private, have capped the number of free transactions per month. However, a few banks insist that account holders who manage to maintain a good balance would be eligible for a charge waive-off.

Experts express fear that the added cost of transaction on the small
value amount could drive people away from the organized banking route,
defeating the very purpose of the scheme.

People with less or no balance, are the ones who need financial
inclusion more than others; and it is this particular sub-set, inclusive
of the urban poor, who will always need less money to withdraw, says
Tata's Patel.

ICRA's co-head Financial Sector Ratings, Vibha Batra, pointed to the
proliferation of ATMs in dense urban centres, where the number of
transactions per ATM were lower and also per account deposits in rural
areas average around Rs. 3,000 to 5,000, and the number of transactions
per ATMs was less and of low value.

The new banks to come up – IDFC and Bandhan Financial Services, could, however, change the financial landscape. The upcoming small banks will require adequate cash transfer and payment infrastructure mechanism to be in place in the next 2-3 years, creating an alternate channel of banking services.

Keen to push through its financial inclusion plan, the government has finalised the life insurance cover to be provided under the Pradhan Mantri Jan Dhan Yojana. But unlike expectations, the cover has several riders, meaning that not all those who have opened an account under the scheme would be eligible for life insurance.

For starters, the Rs 30,000 life insurance cover would be limited to just one account holder per family. “The person should normally be the head of the family or an earning member of the family and should be in the age group of 18 to 59,” the guidelines state.

While the beneficiary will have to mandatorily exit the life insurance scheme at the age of 60 years, the cover is at present available only for a period of five years till 2019-20, after which it will be reviewed.

In addition, the eligibility criteria state that life insurance would be available only to those people opening a bank account for the first time between August 15, 2014 and January 26, 2015.

Further, the person must have a valid RuPay Card and biometric Card linked to the bank account or in the process of being linked to the bank account.

The Centre has also excluded various categories of people from the scheme, including Central and state government employees, people whose income is taxable under the Income Tax Act, 1961 or TDS is being deducted from the income, and their families.

“Persons who are included in the Aam Aadmi Bima Yojana covering 48 occupations defined under the Scheme, and their families” have also been excluded. Further, other eligible account holders who have life cover on account of any other scheme of the Bank against the account will have to choose between the two life covers.

Prime Minister Narendra Modi had launched the scheme on August 28, this year with the intent of financially empowering the people by opening bank accounts for two persons in every household.Additionally, they are to be given a RuPay debit card, accidental insurance cover of Rs 1 lakh and an overdraft facility.

The government has targeted 7.5 crore households under the scheme. At present, 9.04 crore accounts have been opened with total deposits of Rs 7,006 crore. However, 6.68 crore accounts continue to be dormant. Life Insurance Corporation of India is responsible for the life insurance cover through a special fund for the purpose which has an initial corpus of Rs 100 crore from the Social Security Fund.

Eligibility criteria* Insurance would be available only to those people opening a bank account for the first time between August 15, 2014 and January 26, 2015.

* While the beneficiary will have to mandatorily exit the scheme at the age of 60 years, the cover is at present available only for five years till 2019-20 after which it will be reviewed.

The President of India, Shri Pranab Mukherjee inaugurated today (December 11, 2014) a Financial Literacy Centre and a Financial Library at Dr. Rajendra Prasad Sarvodaya
Vidyalaya in the Presidents Estate. A Financial Awareness Festival was
also held in which students of Dr. Rajendra Prasad Sarvodaya Vidyalaya
as well as residents of the Presidents Estate were trained in financial
literacy using a model bank branch of the State Bank of India. NPCI
through RuPay Cards gave Rs. 25/- credit to each student to buy books,
educating them thereby about card transactions. Financial games, quizzes
and other activities were also organized for students, children and
parents.

The Rashtrapati Bhavan launched a campaign for turning
the Presidents Estate into a financially inclusive township (FIT) on
September 27, 2014.

The campaign included:-

A financial literacy programme.

Enrolling all residents in UIDAIs Aadhar scheme.

Opening of Saving Bank Accounts for the unbanked under the Pradhanmantri Jan Dhan Yojana.

Enrolment of people in Swavalamban, - a special scheme of the Pension
Fund Regulatory and Development Authority for those belonging to the
unorganized sector.

Issue of RuPay Cards to new as well as existing account holders of the United Bank of India within the Estate.

To develop a comprehensive strategy, an action plan was developed in
association with representatives of United Bank of India, State Bank of
India, National Payment Corporation of India,Pension Fund Regulatory and
Development Authority, UIDAI etc. Financial literacy-cum-inclusion
camps for residents of the Estate were organized on September 27-28,
2014 and December 7-9, 2014to enrol residents of the Presidents Estate
in various schemes.Special attention was given to senior citizens,
women, special children, domestic help and contractual workers.

Subsequent to the camp held in September 2014, the United Bank of India carried
out a comprehensive survey through door-to-door mapping to ensure that
there are no households left without any bank account. Domestic help and
contractual workers not covered under any health scheme were also
provided benefits under the Delhi Governments Arogya Yojana.

The pilot project to make Presidents Estate an FIT has been undertaken
to establish a model of convergence in government programmes and
services and ensure that benefits of various schemes accrue to all
residents of the Presidents Estate, who number around 5000 persons.

Wednesday, September 24, 2014

RuPay card is India’s answer to the two most dominant market
transaction processing players in the world Visa, MasterCard, AmEx owned
by Visa Inc., MasterCard Inc. and American Express Co. respectively.
India is now the sixth country in the world to have domestic payment
gateway system. Other five countries are US, Japan, China, Singapore and
Brazil.

Having our own domestic card payment network which helps in
electronic money transfers will help both banks (between 200-250 member
banks) and consumers in the following way:

Processing Fee: Since every transaction through
RuPay will take place within India, the banks will have to pay less
service charge to the payment gateway as compared to Visa, MasterCard
and others. For e.g. If a person does a transaction of say Rs. 2,000
then banks will have to pay around Rs.. 2.50 when RuPay is used whereas
for the same transaction amount, Visa or Mastercard will charge Rs.
3.25. Technically speaking, transactions done through international
cards is processed in foreign country which involves higher charge which
helps in generating profit for Visa/MasterCard whereas RuPay
transactions would happen domestically so charge would be less.

Faster transactions: Since processing would be down within India the transactions would be faster as compared to other cards.

International Acceptance: As of now RuPay card
doesn’t have international acceptance, whereas Visa or Mastercard have
been in the market since many years and accepted by most of retailers
online or offline such as Amazon, eBay, Walmart and others. Also
National Payments Corp of India (NPCI) who promotes RuPay card is
working hard to spread it’s acceptance worldwide by partnering with
Discover Financial Services and Japan Credit Bureau (JCB). Read more
about where you can use RuPay card and how to use the card for online payments

Quarterly Fee: In case of Visa and others banks have to pay a quarterly fee which won’t be required in case of RuPay.

Card Type: Currently RuPay offers only debit card
whereas Visa and MasterCard offers debit, credit and debit card. However
RuPay credit card would be made available hopefully by March 2015.

Entry Fee: In case of international cards banks
have to pay entry fee to be a part of their network which is not the
case with RuPay card i.e. no joining fee for the banks.

Member Banks: RuPay card is offered by public
sector, select private banks, rural and co-operative banks (total
200-250 member banks) whereas others don’t include such small banks in
their network. Checkout eligibility for getting RuPay card and withdrawal limit.

Also to increase it’s spread recently Government of India launched
Jan Dhan Scheme under which every account holder would receive RuPay
debit card. See also Jan Dhan Yojana benefits. This will directly increase RuPay’s use.

Bank authorities claimed that HPSCB had
become the first cooperative bank in the country to introduce the
service for its largely rural customers.

RuPay Credit Debit Card Launched

Launched by chief minister Virbhadra
Singh, on the occasion he said, “HPSCB having kept pace with the
changing times in banking services like introducing core banking
solutions and now launching of RuPay credit debit card would go a long
way in providing efficient services to farmers and other customers.”

Chairman HPSCB Harsh Mahajan informed
that the Bank through its more than 207 online branches and extension
counters was extending prompt and uninterrupted services, particularly
to the farming and horticulturalist communities.

Being one of the first cooperative banks
in the country to introduce ATM services, the management plans to open
four new branches at Golthai in Bilaspur, Gattadhar in Sirmaur, Rajnagar
in Chamba and Mandal in Shimla soon.

Besides licenses for starting nine
extension counters at Kudu in Shimla, Nanawan and Kothipura in Bilaspur,
Bir Road Ahju and Ropri in Mandi, at Obri and Sarol in Chamba,
Kamlanagar and Matiana in Shimla have also been granted by Reserve Bank
of India, said Mahajan.

Talking about the RuPay credit-debit
card, Amitabh Awasthi, managing director HPSCB said that it would
facilitate farmers to use their own money or the money loaned from the
bank with ease for undertaking seamless transactions for buying
agricultural inputs, such as fertilizers, pesticides or mechanized tools
such as spray pumps, when required.

Earlier, Harsh Mahajan presented a
cheque of Rs. 21,65,760 as dividend for the year 2012-13 and contributed
a Rs 51 lakh cheque towards the Chief Ministers Relief Fund to
Virbhadra Singh.

Thursday, February 27, 2014

Primary agricultural cooperative societies (PACS) that form the base of
the cooperative credit structure are now set to play a major role in
financial inclusion, as the South Canara District Central Cooperative
(SCDCC) Bank has introduced the facility of RuPay Kisan Credit Card and
RuPay Debit Card for them.

While SCDCC Bank offers the RuPay card facility, around 600
point-of-sale (POS) instruments in PACS and their branches help transact
the RuPay card.

RuPay is a domestic card scheme launched by National Payments
Corporation of India. It enables electronic payments at banks and
financial institutions in the country. VISA and MasterCard are the
foreign payment gateways

Launching RuPay card facility here, MN Rajendra Kumar, President of
SCDCC Bank, claimed that his bank is the first district central
cooperative bank to introduce the facility of RuPay cards to PACS.
(PACS, numbering 166, are affiliated to SCDCC Bank)

He said, probably, SCDCC Bank is the first one where even PACS were
taken on board. In Raigad, the accounts of PACS were shifted to the
district central cooperative bank.

In the case of SCDCC Bank, the identity of PACS was retained. The
transactions done by PACS are reflected in the books of central
cooperative bank.

Nabard has extended ₹1.46 crore for infrastructure such as RuPay cards,
point-of-sales terminals (which are used for swiping cards to do
transactions), etc.

Rajendra Kumar said that all the 166 PACS and their branches will be
brought under CBS (core-banking solution) network by the end of
December. SCDCC Bank, which has 63 branches, implemented the CBS in
2012.

Explaining the benefits of RuPay cards to customers, Chintala said apart
from RuPay there are two other foreign payment gateways. Now whatever
transactions the customers do, the foreign payment gateways debit around
Rs 6 per transaction. A lot of money is going out of the country
through this.

In the case of RuPay, around 40 paisa is charged per transaction, and the money is retained in India, he said.

Rajendra Kumar said that the customers of SCDCC Bank and PACS, who have
RuPay card, can use it for transactions in any part of the country.